Correlation Between Vienna Insurance and Erste Group

Can any of the company-specific risk be diversified away by investing in both Vienna Insurance and Erste Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vienna Insurance and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vienna Insurance Group and Erste Group Bank, you can compare the effects of market volatilities on Vienna Insurance and Erste Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vienna Insurance with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Erste Group.

Diversification Opportunities for Vienna Insurance and Erste Group

0.81

Correlation Coefficient

Vienna Insurance  Erste Group

Very poor diversification

The 3 months correlation between Vienna and Erste is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance Group and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Vienna Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vienna Insurance Group are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Vienna Insurance i.e., Vienna Insurance and Erste Group go up and down completely randomly.

Pair Corralation between Vienna Insurance and Erste Group

Assuming the 90 days trading horizon Vienna Insurance Group is expected to generate 0.53 times more return on investment than Erste Group. However, Vienna Insurance Group is 1.89 times less risky than Erste Group. It trades about 0.43 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.08 per unit of risk. If you would invest  75,600  in Vienna Insurance Group on December 30, 2024 and sell it today you would earn a total of  26,000  from holding Vienna Insurance Group or generate 34.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Vienna Insurance Group  vs.  Erste Group Bank

Vienna Insurance

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Vienna Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Erste Group Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Erste Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vienna Insurance and Erste Group

The main advantage of trading using opposite Vienna Insurance and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vienna Insurance position performs unexpectedly, Erste Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Erste Group will offset losses from the drop in Erste Group's long position.

The idea behind Vienna Insurance Group and Erste Group Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.